CITY FOCUS by DOMINIC RUSHE: BP braced for costly showdown in courts

Lawyers and legal experts are poring over BP's self-penned report into the Deepwater Horizon disaster, as they assess their next move in what many believe may be the most costly corporate showdown in history.

BP faces a battery of legal cases over the coming years and this week tried to spread the blame in its 234 page report.

Peter Henning, professor at Wayne State University Law School, believes the eventual bill for Deepwater could top $50billion (£32billion). This includes the $20billion BP has already earmarked to cover clean up costs.

John Coffee, law professor at Columbia University, said it was
unlikely BP itself would be targeted by a criminal prosecution.

Enron accountant Arthur Andersen was the last US firm to face
criminal charges. The prosecution destroyed the firm. He said
prosecutors were more likely to go after executives.

More...

Lawyers are jockeying for position to represent the multi-billion
dollar pension funds and small investors preparing to sue BP for the
collapse in its share price.

If anyone need reminding of the potential for legal claims from
the spill, they need look no further than a previous BP disaster.

The company is already being sued by the Lothian pension fund,
which alleges it lost money because of far smaller falls in the BP share
price after a pipeline leak in the Prudhoe Bay field four years ago.

Thomas Dubbs, senior partner at New York law firm Labaton
Sucharow, which is representing the Scottish fund said: 'The attempts to
spread the blame in this report show that the lawyers are now in charge
at BP and the days of 'Let's make it right' may be over.'

In its report, BP accepted some culpability, but the company
denied its rig design was at fault for the disaster. In an attempt to
deflect blame, BP also claimed Transocean and Halliburton, it's two main
contractors at the rig, were responsible for fatal mistakes.

But, BP remains firmly in the firing line. The US government has a
dedicated task force, which includes the FBI, the Environmental
Protection Agency and others, preparing a potential criminal case
against BP, its executives and its partners in Deepwater Horizon.

Lawyers for the grieving relatives of the 11 people lost and 17
injured in the rig blast have filed suit; investors are mounting class
action legal claims; whole states are suing for lost revenue; and
hundreds of businesses hit by the spill are chasing BP for damages.

BP's report was slammed by rig operator Transocean and
Halliburton, which supplied crucial services like the cement casing to
the ruptured Macondo well.

Transocean described the report as a 'self-serving' attempt to
conceal BP's culpability.

The government's BP squad is not solely concentrating on the oil
spill itself. According to reports, the investigators are taking a very
broad approach, probing possible share dealing violations and false
statements to government officials as well as BP's relations with those
responsible for overseeing the offshore oil industry. The task force
will be reporting 'directly to the White House', said one lawyer briefed
on the situation.

Professor Henning said the potential costs of fines alone could
top $10billion to $15billion, adding: 'Not even the Exxon Valdez
disaster came close to this marshalling of government investigators. But
of course we've never had a spill of this magnitude either. BP have
lost their fight with the government. It's the cost spreading that's
important now.'

Lawyers said this week's report was the biggest salvo so far in
BP's battle with its former partners over indemnifications - legal
agreements that protect against damages or loss.

Halliburton and Transocean claim to have broad indemnification
agreements with BP that will leave the British firm with virtually all
the spill costs.

In a regulatory filing, for example, Transocean says that BP has
assumed 'full responsibility for any loss, expense, claim, fine, penalty
or liability for pollution or contamination'. BP is already challenging
the claims.

One lawyer close to the action said the fall out was likely to be
costly for all sides. 'The more information that comes out, the more
we'll have to work with. It's a lose lose situation for them and a win
win for us,' he said.

BP may attempt to spread the blame far and wide, but the oil
giant is still, undoubtedly, the focal point for America's red- clawed
legal eagles.